Sweden Tax Agency Clarifies Pharmaceutical Manufacturer’s Right to Reduce VAT Base for Reimbursement

The Swedish Tax Agency March 9 issued Advance Notice No. 87-22/I, clarifying the right of a pharmaceutical manufacturer to reduce its tax base for a reimbursement it made on medicines within the benefit system. VAT applied to its sales of prescription medicines within the system to distributors, and to the distributors’ sales to pharmacies. The pharmacies were entitled to an input tax deduction, and their sales to regions didn’t include VAT. The sales to end consumer were exempt. The manufacturer inquired whether it was entitled to reduce outgoing VAT due to the reimbursement it paid the regions on the pharmacies’ ...